Seeking $2.5 trillion in credit

Mortgage industry pushes new message in a banner year

CHICAGO (CBS.MW) -- For an industry that is having a record year -- the second in a row, by the way -- you'd think mortgage bankers would be the most upbeat crowd around.

But as members of the Mortgage Bankers Association of America gather here this week for their annual convention, the exhilaration is muted.

Certainly, there are plenty of reasons to celebrate. Predictions for 2002 mortgage-origination volume continue to grow -- from less than $2 trillion a year ago, to $2 trillion midyear to as much as $2.5 trillion today.

"Mortgage banking is having an extraordinary year, a great year. So let's enjoy it," said Leland Brendsel, CEO of secondary mortgage market agency Freddie Mac.
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"I doubt next year will match this for sheer volume."

Unlike in the refinance boom in the early 1990s, the industry is not crushed under the weight of all that mortgage paperwork: Technology such as automated underwriting systems has made processing faster and more efficient.

"This tidal wave of refinancing has been handled with minimum disruption or delay," said Jamie Gorelick, vice chairman of Fannie Mae, the other secondary market giant. "In fact, things appear so strong that it will clearly spill over now into 2003."

Plus, in contrast to other areas of financial services, the mortgage business has been adding workers -- 81,000 since January of 2001, a 27 percent increase.

Reasons to pout

Yet for all the positives, there are a number of issues bedeviling residential lenders, dampening some of the party mood.

For one thing, reform of the Real Estate Settlement and Procedures Act, which governs the home-sale closing and thus much of the mortgage process, is coming to a head in Washington, with comments on proposed changes to the outdated regulations due to the U.S. Dept. of Housing and Urban Development by Oct. 28. While almost everyone agrees reform is needed, the mortgage bankers don't like everything HUD is proposing and plan to seek amendments.

For another, mortgage bankers are frustrated by a growing patchwork of state and local regulations aimed at curbing predatory lending -- in a nutshell, the practice of charging excessive fees or outrageous interest rates to borrowers, many of whom are minorities or elderly. The MBA leadership is considering lobbying for a federal predatory lending law that would preempt the state actions.

And for the group's commercial members, increased terrorism insurance costs loom as a threat to many deals. And while there is a compromise on legislation that would provide federal help in the area, there is no guarantee of passage when Congress returns from its election hiatus.

But what really may be bugging the mortgage bankers more than anything is that they feel they aren't getting much credit for all the good things that are going on in the housing sector.

"We have a wonderful message and we need to get it out," said John Courson, CEO of Central Pacific Mortgage in Folsom, Calif. and the chairman of the MBA.

Many voices

The problem, Courson says, is that the mortgage banking industry has become so diverse that many voices and many agendas get put in front of the public, the Congress and the people like Brendsel and Gorelick that run the housing finance system.

"We are simply a mirror of those communities that we are helping to grow," Courson said. "People benefit from what we do. But we have to have something tangible to show, some examples that are easily understood."

"We have had messages in the past, when issues come up or the economic climate changes, we've been successful at crafting messages for the moment," he said. "But what we need is the bigger message that tells what the association does, a message that has stamina and holds us in good stead for years to come."

"We're going to talk to consumers, to communities and to neighborhoods. The American people can be our most important lobbying tool. This is a change in strategy for us, but a change that we're well behind in implementing."

Courson, who started in the mortgage-banking business as a document courier when he was 15, can rightfully boast of his profession and his accomplishments. But will the American people buy into a public-relations messaging campaign when what they most want is the lowest interest rate they can possibly get and the least amount of headaches from their mortgage lender?

Maybe not. But Courson has his own alternative messaging system. He has already written letters to his four grandchildren, letters they won't be able to read or comprehend for several years, that explains what mortgage bankers do and the role they play in turning people into homeowners.

"I wrote that being a part of this industry is something to be proud of and that I hoped, when they were grown and somebody asked them what they did, they might say 'Like my Gramps, I'm a mortgage banker.'"

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